高级财务管理课程案例作业report

高级财务管理课程案例作业高级财务管理课程作业名称：通过一家跨国公司年报对其公司财务进行分析Financial analysis——Elizabeth ArdenIntroductionElizabeth Arden, Inc. is a global prestige beauty products company with an extensive portfolio of prestige fragrance, skin care and cosmetics brands. Their common stock is traded on the NASDAQ Global Select Market under the symbol “RDEN.” In addition to their owned and licensed fragrance brands, they owned and licensed fragrance brands. They sell prestige beauty products to department stores, retailers and other outlets in the United States and internationally.Sales and profitsThe net sales and gross profit kept growing in the last three fiscal years, in which net sales grew by 5.3% and gross profit grew by 9.5% from fiscal year 2011 to fiscal year 2012. The most remarkable performance was the net income. It increased rapidly by 40% from fiscal year 2011 to 2012. According to the annual report, the CEO stated that the performance was beyond most of other companies in this industry. It was a good signal for investors that Elizabeth Arden was a prospecting company.New chancesElizabeth Arden is a very famous brand in America. Since the company has already run stably there, it is in the bottleneck to spread further. So the wise choice is to find another market. And they did explore outside America. Thanks to the development of international media and commerce, they now share larger and larger markets all overthe world, such as Eastern and Western Europe and Latin America. Showing in the graph above, the sales in foreign markets covered 42% of their total sales in fiscal year 2012. Over the last two fiscal years, they had increased fragrance sales in international markets by a compounded annual growth rate of 10%, well in excess of industry growth rates. Still there is room to do better surely. For example, China was the sixth biggest market of Elizabeth Arden’s selling areas. China owns the largest population in the world and it is one of the fastest developing countries, thus meaning it is very possible to let China be the largest foreign market for Elizabeth Arden.Strategies and risks in chancesTheir business strategies are currently focused on two primary initiatives: the global reposition of the Elizabeth Arden brand and expanding the market penetration of prestige fragrance portfolio in international markets, especially in the large European fragrance market.They integrated several acquisitions to launch the repositioned Elizabeth Arden brand. They were preparing to debut the repositioned Elizabeth Arden brand in key global flagship doors beginning in the fall of 2012 and continuing throughout 2013.In fiscal year 2013, they were increasing their focus on fast growing markets, opening an affiliate office in Brazil and dedicating additional resources to the markets in Asia and Europe.Because of the participation in global market, their financial results of the company’s international operations are subject to volatility due to fluctuations in foreign currency exchange rates, inflation, disruptions in travel and changes in political and economic conditions in the countries in which they operate. The value of international assets and liabilities is also affected by fluctuations in foreign currency exchange rates.Let me analyze the risk of foreign currency exchange rates further. With respect to international operations, sales of goods sold and expenses are typically denominated in a combination of local currency and the U.S. dollar. Results are reported in U.S. dollars. Fluctuations in currency rates can affect reported sales, margins, operating costs and the anticipated settlement of foreign denominated receivables and payables.A weakening of the foreign currencies in which they generate sales relative to the currencies in which costs are denominated, which is primarily the U.S. dollar, could adversely affect their business, prospects, results of operations, financial condition or cash flows.To hedge the foreign currency risk, I recommend them to sign hedging contracts to fix the rates like forward exchange rate contracts. Or they can find proper currency options to set off any losses caused by foreign currency transaction. They can also find manufactures in the same country where they sell products to match the risks of cost and sales.Investment portfolioElizabeth Arden made several types of investment:●Investment in Red Door Spa Holdings( to accelerate the growth of the spabusiness in parallel with the Elizabeth Arden brand repositioning and the growth of the Elizabeth Arden brand)●Allowances for Doubtful Accounts Receivable.●Provisions for Inventory Obsolescence.●Additions to property and equipment●Acquisition of businesses, intangible and other assetsFor the year ended June 30, 2012, net cash used in investing activities of $153.2 million was composed of $24.1 million of capital expenditures and $129.1 million related to the acquisition of businesses, intangibles and other assets. The total invested net cash grew by 288% from fiscal year 2011 $39,472,000 to 2012. This is acceptable because of the company’s strategies of expansion the market and reposition of the brand.They expected to incur approximately $40 million in capital expenditures in the year ending June 30, 2013, primarily for in-store counters and displays related to the Elizabeth Arden brand repositioning, tools for new fragrance launches, as well as leasehold improvements and computer hardware and software.Financing portfolioAt June 30, 2012, Elizabeth Arden had total debt of approximately $339 million which includes $250 million in aggregate principal amount outstanding of 73⁄8% senior notes and $89 million outstanding under revolving bank credit facility.For the year ended June 30, 2012, net cash provided by financing activities was $96.8 million, as compared to net cash used in financing activities of $28.5 million for the year ended June 30, 2011. For the year ended June 30, 2012, borrowings under credit facility increased by $89.2 million primarily to fund the 2012 acquisitions. Proceeds from the exercise of stock options were $5.6 million for the fiscal year ended June 30, 2012 period compared to $20.4 million for the prior year. There were norepurchases of common stock during the fiscal year ended June 30, 2012, and repurchases of common stock in the prior year were $13.8 million.Interest paid during the year ended June 30, 2012, included $21.3 million of interest payments on the 73⁄8% senior notes due to the timing of interest payments following the issuance of such notes in January 2011 and $2.2 million of interest paid on the borrowings under credit facility. Interest expense, net of interest income, increased 1.3%, or $0.3 million, for the year ended June 30, 2012, compared to the year ended June 30, 2011. The increase was primarily due to higher long-term debt in the current year as a result of the higher aggregate principal amount of our 73⁄8% senior notes issued in January 2011.There are risks existed, including some conditions that could limit the ability to finance future operations or capital needs, make acquisitions or pursue available business opportunities. The revolving credit facility, for example, requires them to maintain specified amounts of borrowing capacity or maintain a debt service coverage ratio. The ability to meet these conditions and the ability to service debt obligations will depend upon future operating performance, which can be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond the company’s control. If actual results deviate significantly from projections, they may not be able to service debt or remain in compliance with the conditions contained in revolving credit facility, and they would not be allowed to borrow under the revolving credit facility.A default under revolving credit facility could also result in a default under indenture for 73⁄8% senior notes.Reference/Company/3046/。